Product and Asset Allocation Strategies

Since your portfolio seeks to maximize potential returns while minimizing risk, it's important that your investments are allocated over a variety of asset classes, such as equities, fixed income, real estate (Alternatives) and cash. The reason is that each asset class performs differently over time due to its unique balance of risk and reward. Traditionally, stocks have a higher rate of return, but also a higher risk. Bonds and cash both are usually lower-risk investments, which produce more modest returns.

We also highly recommend a “bricks and mortar” real estate fund (vs. a real estate stock fund) to be included within the “alternative” investment class of a multi-asset portfolio strategy.

The traditional arguments for including real estate are;

  • It has a low correlation with stocks and bonds.
  • Historically has had a high risk-adjusted rate of return relative to stocks and bonds.
  • Positive correlation with inflation and therefore provides an inflation hedge.

Strategic Asset Allocation

Review the client’s current portfolio to determine whether it is appropriate to their investor profile and objectives.

Enhance portfolio tax efficiency by distributing asset classes appropriately among RRSP and non-registered investment portfolios, and/or between spouses.

Strategic Investment Selection

Establish the appropriate investment structure that best meets the client’s overall objectives to maximize estate values (segregated funds), enhance tax-efficiency (corporate class mutual funds), or minimize investment expenses (mutual fund trusts).

Determine the specific investment funds and weightings within each asset class that provide broad diversification by employing a multi-manager, multi-mandate, multi-style approach.

Segregated Funds

They operate in a similar manner to mutual funds but they are offered by insurance companies and therefore subject to insurance legislation instead of securities legislation. Here are some of their advantages that segregated funds offer:

  • Capital guaranteed:
    • Guarantees that offer a certain level of protection on your capital investments upon the maturing of a policy or on death.
  • Estate bypass:
    • Assets flow directly to the beneficiary, bypassing estate and associated probate fees.
  • Potential creditor protection:
    • As insurance contracts, segregated funds offer the opportunity for creditor protection under appropriate circumstances.